By Mr. B
You’ve probably heard about the Schwab Invest First credit card already. You know, the one that offers 2% cashback on all purchases? It’s been available for roughly a year now, but Schwab has stopped actively promoting it. A working application link is difficult to find, but try this one below:
In years past, my most-oft-used card was the Chase Freedom card. No longer! Once Chase decided to flush the Freedom card down the toilet, I started hunting for a new rewards credit card.
As it so happens, the Great Recession has taken its toll, and if you have any credit card at all, you’ve likely seen your limit slashed, APR raised, and any rewards program reduced. Pitiful, really.The most frustrating aspect is that many of the biggest recipients of the taxpayer bailout (TARP) have been the most aggressive to punish cardholders. I’m looking at you, Chase!
Anyway, 2% cashback offering from Schwab was already enticing when it debuted at the end of 2008, but it’s flat-out one of the best deals around now. Here are some highlights:
- Unlimited 2% cashback on all purchases; no spending tiers or caps
- Cashback automatically deposited monthly into a linked Schwab brokerage account
- No foreign transaction fees (great for traveling abroad)
It isn’t the sexiest card around, but it offers one of the best reward systems right now. The only hurdle at the beginning is that you also need to open a Schwab brokerage account to collect the rewards. Fortunately, this is easy to do, and can be opened simultaneously with the Invest First card. The brokerage account has no monthly fees, and the $1,000 minimum deposit is waived when you link the card to the brokerage account.
I like this card because the cashback rewards are automatically deposited straight to the brokerage account each month. You don’t have to worry about accumulating cashback to a certain dollar amount before you redeem. I also appreciate the lack of foreign transaction fees. In a time when other companies are raising their foreign fees to 4% or higher, this is a breath of fresh air. Earlier this month my wife and I traveled to Puerto Rico, and I can verify that the 0% foreign transaction fee is true.
Screw Chase. Screw Citibank. Unless Schwab waters down the 2% cashback rewards, I’m making this my main credit card.
QUOTE:
Earlier this month my wife and I traveled to Puerto Rico, and I can verify that the 0% foreign transaction fee is true.
UNQUOTE:
I’m not an educated world traveler but the last time I checked, Puerto Rico was still a U.S. Territory. You may have felt as if you were in a foreign country but I don’t believe you are required to have a passport to travel to Puerto Rico nor would you go through customs/immigration upon return from Puerto Rico.
Could the fact that Puerto Rico is not really a foreign country be the reason you did not see any foreign transaction fees?
Bill,
Yes, Puerto Rico is a US territory, but from the perspective of the most banks, it is still foreign enough for them to charge foreign transaction fees.
I called Citibank to ask them about it, and they told me that yes, they would charge a foreign fee. That stinks, but it’s their policy (hency why I used the Schwab card exclusively there).
I contacted Chase (two cards – Marriott & Sapphire) and RBS.
At Chase I connected to a Customer Svc center in India – They had no clue about Puerto Rico – they even thought that Puerto Rico used different money! I asked to be transferred to a U.S. Customer Service rep (10 min wait).
The Chase Customer Service rep explained Foreign Transaction Fees in detail to me. He stated the fee is basically so they can recoup the fee for transferring money from a foreign currency back into U.S. currency. He stated that everything in Puerto Rico was in U.S. currency so therefor there would be no fee. He further explained that if I was to go to another country but purchase my hotel and foreign airline airfare online before travelling and paid in U.S. dollars, there would be no fee. He also stated that some places outside of the United States bill in U.S. currency so therefore even if in another country, there would be no foreign transaction fee.
I then called RBS – a girl with a very New York accent proceeded to tell me that “she believed that Puerto Rico used another countries money or had their own currency, thus there would be a fee. I didn’t want to make her sound dumb so I asked her if this was a fact she was stating or what she believed her interpretation of a foreign transaction fee was – she stated the later. I told her I would call back tomorrow and ask to speak to a few manager levels deep for a written answer.
WOW – I would guess that one would have to have a high school diploma to work in a credit card call center – not knowing what Puerto Rico uses for currency though – I was shocked!
I did not call Citibank as you already called them – but I wonder if the Customer Service reps really have a clue to the Puerto Rico question.
You have me wondering though – is this a bank thing or a Visa/MasterCard thing? I should call Visa or MasterCard…
Great points. Now I’m wondering if the Citi rep gave me correct information. When I called, my purpose was simply to report that I would be in Puerto Rico for a few days and would have one of their cards with me. The CSR proceeded to inform me (without prompting on my part) that there would be a foreign transaction fee for all purchases (I think 4%?). When I mentioned that Puerto Rico was a US territory, the CSR was adamant that there would still be a fee.
Was he right? I didn’t bother to find out since I only used my Schwab card.
Thanks for the article Mr. B, and your article on the downfall of Chase Freedom.
Ever since Chase Freedom moved their 3% rewards to quarterly “mystery” categories, I’ve been looking for an alternative. I opened a Discover Card recently, which was my first “rotating reward category” card that I’ve ever opened. After being exposed to this reward method, I hate it. At the time I applied, I thought it would be great. I’m thinking about closing it now because even though 5% cashback at restaurants & gas is awesome, the fact that the 5% cashback is only good for 3 months out of the year makes it useless, especially when you consider the other 9 months you’re only getting 0.25% (0.0025). At least Chase offered 1% back on “all other purchases”.
Shortly after that, I opened an Amazon rewards card. As far as I knew, this was the best alternative to Chase Freedom/Discover until I read this article. With the Amazon card, you get 3 points for every eligible dollar spent at Amazon.com; 2 points on gas, dining, office supply and drugstore purchases; 1 point for everywhere else.
The Schwab card sounds perfect and I think I will be making it my primary card as well. Categorical reward programs suck IMO especially when they change as frequently as every quarter.
BTW, my Chase Freedom card still shows me the ability to claim a $250 check for $200. I only have $20 in rewards right now, and I bet they only make it disappear when card members get close.
Thanks again for the articles.
Maybe a dumb question, but what are your options once the cashback gets transferred to your brokerage account? Can you transfer the money to your main bank account?
Thanks
Mike
Mike – not a dumb question at all. Yes, you can link your Schwab One account to an external bank account and transfer the money out at will. Or, you can keep it in the account and invest it how you like. Either way, it’s yours.
Based on the recent NYTimes report that suggested the window would be closing for the Schwab First Visa card, I applied and got a card. I already had an inactive Schwab brokerage account as a result of a employee stock purchase. I also opened Schwab high yield checking account to so that I could get a Visa debit card for fee-free international ATM use.
Most other Visa and MasterCards have added foreign TRANSACTION fees (any transaction that involves a non-US bank or processor), whereas American Express and Discover card impose foreign CURRENCY CONVERSION (only when the transaction is non-US Dollar based) fees. It’s funny to see that Puerto Rico seems to be a grey area for Chase and Citi. I’ll keep using my Capital One card. When I went to Japan, I noticed that the exchange rate was virtually the same as the wholesale OandA.com rate. Plus 1.25% cash rewards.
askmrlee – Yep, I have a Capital One card that doesn’t generally get much usage, except when I’m out of the country. Back in 2008 I spent the summer in Greece and used that card exclusively. Now I bring it and my Schwab card with me when I travel abroad.